Finding some CLASS

HHS won't implement it, congressional Republicans want to kill it, and the White House says repealing it isn't necessary or productive. But experts contend that when it comes to the CLASS Act, “it” still needs to be defined.

Included in last year's healthcare reform law, the Community Living Assistance Services and Supports Act was envisioned as a voluntary, affordable, long-term-care insurance program. HHS was responsible for developing a benefit plan that was financially sustainable for 75 years and met the legal requirements outlined in the Patient Protection and Affordable Care Act.

HHS Secretary Kathleen Sebelius said her department spent the past 19 months examining the long-term-care market, modeling the possible designs and studying the law. “We have not identified a way to make CLASS work at this time,” she wrote in an Oct. 14 blog post.

But others say that conclusion is premature. “We handed the administration an infrastructure. That was it,” said Connie Garner, former policy director for disability and special populations at the Senate Health Education Labor and Pensions Committee under the late Sen. Ted Kennedy (D-Mass.), a champion of the program. Garner now serves as the executive director of Advance CLASS, an advocacy group.

When the president signed the bill into law, the administration had a framework to begin working on the issue of long-term care, Garner said. She likened the endeavor to solving a Rubik's cube. In other words, keep at it until it works.

Garner said the concept and design of CLASS is unfamiliar to those in government, with no directly comparable data to show potential for success. The data available, she said, is from the long-term-care industry. Private benefits have a 2% participation rate, Garner said, so the outlook for CLASS is bleak based on those numbers. “Every actuary in the country that we've worked with has said the same thing,” she said. “On this program, you're not going to know until you know.”

Meanwhile, HHS was presented with some viable options, according to the former chief actuary of the CLASS office. “We have some design concepts that we think work,” said Bob Yee, who held that role until recently. “When I say, ‘we,' really it represents the works of the CLASS office,” he said. He outlined those concepts in a nearly 50-page report to CLASS Administrator Kathy Greenlee. “And all of these concepts are designed to control the adverse-selection problem that most people think are non-workable.”

Yee's report—which also was included in Greenlee's full report on CLASS to Sebelius—describes in great detail three possible designs: a phased enrollment alternative that uses some risk-mitigating practices from group long-term-care insurance; a temporary exclusion design in which no benefits will be paid during the first 15 years of an individual's enrollment; and a limited initial benefits plan, which pays a low benefit (for instance, $5 a day) if the benefit is claimed during the first 20 years and regular benefits (say, $50 a day) otherwise.

The designs are presented from an actuarial, not a legal, perspective. And it was balancing those two guidelines—financial sustainability and legalities of the statute—that posed problems for HHS, Greenlee told reporters when HHS said it would not implement the program.

But the work of Yee and his staff shows promise for developing CLASS because it proves there are ideas to build on, said Dr. Cheryl Phillips, a geriatrician who serves as senior vice president of advocacy at LeadingAge, which represents not-for-profit long-term-care providers. Long-term care averages about $75,000 a year in a nursing home, and fewer than one-third of seniors can afford three months of long-term care, she said.

“The safety net we currently have is Medicaid,” Phillips said. “That is often defined by nursing home coverage,” she said. People very quickly deplete their assets to a level that makes them eligible for Medicaid, and then the only option is a nursing home.

Phillips said the CLASS Act has become a partisan issue not because of its concept, but because it was linked to the Affordable Care Act, which Republicans are working to dismantle. “I happen to be fiscally conservative and right-leaning, but I know we don't have any other program for a growing, needy population,” Phillips said. She views the core of CLASS—in which participants pay in to a system, meet strict criteria, and direct the funds—as Republican-minded principles.

Some Republicans in Congress don't think so. Rep. Charles Boustany (R-La.), a physician, and Sen. John Thune (R-S.D.) introduced bills this year to repeal CLASS.

Meanwhile, a White House spokesman said in an e-mail that repealing CLASS isn't necessary or productive, and that the focus should be finding solutions to the cost of long-term care.

Boustany, though, said in an interview that he and some of his colleagues want to eliminate the possibility that CLASS will resurface. “We want to put it to rest and finalize getting rid of this program.”

HHS officials were not available for interviews last week, and a spokeswoman said only that the agency has no further updates on the program. One question that lingers is why the administration never appointed an independent advisory council for CLASS, which was required in the law. Yee, Garner and Phillips all said an independent panel could help move the program in the right direction.